Stem Cell Institute Q1 FY2027 Earnings Deep Dive Report

1. Earnings Highlights and Key Topics

The Q1 FY2027 financial results for Stem Cell Institute, Inc. (Securities Code: 7096) clearly demonstrate two key pillars: the maintenance and strengthening of a solid domestic earnings base and the steady progress of upfront investments in the Southeast Asian business , which serves as a major future growth engine.

Below are the 10 key topics from these financial results that are of high importance to investors:

1. Consolidated Earnings Summary : Recorded net sales of ¥722 million , operating profit of ¥40 million , ordinary profit of ¥43 million , and quarterly net profit attributable to owners of the parent of ¥35 million .
2. Strong Domestic Expansion : Domestic sales grew by +3.0% YoY to ¥722 million , while domestic operating profit achieved a significant increase of +41.0% YoY to ¥92 million .
3. Overseas Upfront Investment : Recorded an operating loss of ¥51 million in the overseas segment, reflecting upfront investments in organizational setup and personnel recruitment for the launch of operations in Singapore.
4. High Progress Against Full-Year Forecast : Achieved a 41.0% progress rate toward the full-year consolidated operating profit target (¥100 million) as of Q1, marking a strong start.
5. Increase in Stored Samples : Total stored samples in Q1 reached 3,212 units (+2.8% YoY) .
6. Stable Growth in Umbilical Cord Storage : High-value-added umbilical cord storage samples remained solid at 1,330 units (+3.9% YoY) .
7. Penetration of New "HOPECELL" Plan : Stabilization of document requests and contract conversion rates has led to improved unit prices and customer acquisition.
8. Three Pillars Supporting Domestic Growth : Continued implementation of flexible pricing (e.g., up to 120 interest-free installments), enhancement of storage value for cerebral palsy, ASD, and nerve regeneration, and strengthened collaboration with obstetric facilities.
9. Completion of Southeast Asian Infrastructure : A state-of-the-art Cell Processing and Storage Center has been completed within the "Mapletree Hi-Tech Park" in Singapore.
10. Growth Roadmap for Mid-Term Management Plan (2027-2030) : Outlined a long-term roadmap targeting consolidated sales of ¥5.5 billion and operating profit of ¥1.0 billion (18.2% operating margin) by the fiscal year ending March 2030.

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2. Profit Structure and Progress Analysis: Domestic Profitability Absorbs Overseas Investment

The most significant aspect of the consolidated results is the profit structure, where the high profit margins generated by the domestic business are effectively covering the upfront investment costs associated with overseas market development .

As shown in the "P/L Summary (Domestic/Overseas)" slide above, domestic sales expanded from ¥700 million in the same period last year to ¥722 million (+3.0% YoY) . Concurrently, domestic operating profit increased significantly from ¥65 million to ¥92 million (+41.0% YoY) , driven by improved operating efficiency and the penetration of high-value-added plans.

Meanwhile, the overseas segment, centered on Southeast Asia, incurred an operating loss (upfront investment) of ¥51 million due to the establishment of local bases, licensing procedures, and the recruitment/training of local technicians. As a result, consolidated operating profit was ¥40 million , but the progress rate against the full-year forecast of ¥100 million is 41.0% , significantly outpacing the standard Q1 benchmark (25.0%).

Sales progress against the full-year consolidated forecast of ¥3.1 billion (projecting ¥3.0 billion domestic and ¥100 million overseas) stands at 23.3% , maintaining a pace generally in line with the plan.

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3. Trends in Stored Samples and KPI Analysis of "HOPECELL"

The core of Stem Cell Institute's stock business model is the accumulation of "umbilical cord blood" and "umbilical cord" storage samples .

Looking at the performance trends for sample counts, the total number of stored samples in Q1 FY2027 was 3,212 units (+2.8% YoY) . The breakdown is as follows:

• Umbilical Cord Blood Storage : 1,882 units (+2.1% YoY)
• Umbilical Cord Storage : 1,330 units (+3.9% YoY)

In particular, the number of "umbilical cord" storage samples, which has been driving recent growth, has increased steadily from 612 units in Q1 FY2025 to 1,280 units in Q1 FY2026 (+109% YoY), and now to 1,330 units this term.

Since the launch of the new integrated plan "HOPECELL" in November 2024, key KPIs have remained at high levels. Due to the continuation of various measures such as free storage fee campaigns, monthly document requests have remained in the 2,300–2,400 range, and the contract conversion rate for the new plan among expectant parents is approximately 29.0% , showing a significantly higher and more stable trend compared to the old plan era (10% to low 20% range).

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4. Three Key Measures for Sustainable Domestic Growth

In the domestic business, the following three key measures are being implemented to achieve both an increase in storage volume and unit price, even under the external environment of a declining birthrate.

1. Increasing Flexibility in Pricing Structure
   • Expanded discounts for long-term storage and premium plans for lump-sum payments to strengthen incentives for long-term users.
   • Offered up to 120 interest-free installments to significantly lower the barrier to entry for younger generations and parents.
2. Enhancing Storage Value
   • Umbilical Cord Blood: Continued promotion of existing clinical research for cerebral palsy and Autism Spectrum Disorder (ASD).
   • Umbilical Cord: Expanding potential for new medical applications, such as nerve regeneration, through the deployment of "Family Supernatant®."
3. Strengthening Customer Reach
   • Restructuring the sales organization for key obstetric facilities and promoting deep-dive and new business development.
   • Strengthening direct contact with expectant mothers through active participation in maternity events (scheduled to exhibit at 6 major nationwide events between September and November 2026).

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5. Progress in Southeast Asian Business: Completion of Singapore Base and Regional Expansion

Infrastructure development for the Southeast Asian business, expected to be a major growth driver, is proceeding steadily.

The "Cell Processing and Storage Center" (approx. 450㎡) under construction in Singapore's "Mapletree Hi-Tech Park" has been completed . It is equipped with ISO-compliant cleanrooms, a 24/7 monitoring system equivalent to that in Japan (SMARTDAC+®), and power generation/UPS facilities, establishing a high-quality management system.

Due to the time required for administrative procedures and licensing, the start of operations has been revised from the initial plan (June 2026) to around September 2026 . This change has already been factored into the full-year earnings forecast, and there are no changes to the full-year performance plan.

Furthermore, with Singapore serving as the hub for Southeast Asian expansion, concrete negotiations with local partners are underway for entry into Indonesia and Vietnam .

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6. Mid-to-Long-Term Growth Strategy: Roadmap Toward FY2030

Stem Cell Institute has set forth a Mid-Term Management Plan (2027-2030) with the two pillars of stable domestic earnings and the development of growth markets in Southeast Asia.

As shown in the slide above, the target figures for the Mid-Term Management Plan are as follows:

• FY2030 Consolidated Targets
  • Net Sales : ¥5.5 billion (Domestic: ¥4.0 billion, Overseas: ¥1.5 billion)
  • Operating Profit : ¥1.0 billion (Domestic: ¥625 million, Overseas: ¥375 million)
  • Operating Profit Margin : 18.2%

Although the consolidated operating profit margin will temporarily decline to 3.2% in the current fiscal year (FY2027) due to initial upfront investments in the overseas business, the company plans to achieve dramatic expansion into a high-profit structure by FY2030, following FY2028 (Sales: ¥3.8 billion, Operating Profit: ¥429 million, Margin: 11.3%) and FY2029 (Sales: ¥4.6 billion, Operating Profit: ¥740 million, Margin: 16.1%).

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7. Summary and Future Focus Points

Stem Cell Institute's Q1 FY2027 earnings results demonstrate that the strong profit-generating capability of the domestic business (+41.0% domestic operating profit) has sufficiently covered the upfront investment costs for Southeast Asia, resulting in a high progress rate of 41.0% against the full-year operating profit target.

Key points to watch moving forward include:

• The full-scale commencement of operations and completion of licensing for the Singapore base, scheduled for around September 2026.
• The speed of new customer acquisition in the Southeast Asian market and the concretization of expansion into Indonesia and Vietnam .
• The further penetration of the "HOPECELL" plan and the increase in the ratio of high-value-added umbilical cord storage in Japan.

By combining a stable domestic stock business foundation with wide-area expansion in Southeast Asia, the company is expected to advance its growth story toward the ¥5.5 billion sales and ¥1.0 billion operating profit target for 2030 as outlined in the Mid-Term Management Plan.